To the Members of Mphasis Limited
Report on the Standalone Ind AS Financial Statements
We have audited the accompanying standalone Ind AS financial statements of MphasisLimited ("the Company") which comprise the Balance Sheet as at 31 March 2017the Statement of Profit and Loss including the statement of Other Comprehensive Incomethe Cash Flow Statement and the Statement of Changes in Equity for the year then ended anda summary of significant accounting policies and other explanatory information.
Management's Responsibility for the Financial Statements
The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone Ind AS financial statements that give a true and fair view of thefinancial position financial performance including other comprehensive income cash flowsand changes in equity of the Company in accordance with accounting principles generallyaccepted in India including the Indian Accounting Standards (Ind AS) specified undersection 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014 and theCompanies (Indian Accounting Standards) Rules 2015 as amended. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and the designimplementation and maintenance of adequate internal financial control that were operatingeffectively for ensuring the accuracy and completeness of the accounting records relevantto the preparation and presentation of the Ind AS financial statements that give a trueand fair view and are free from material misstatement whether due to fraud or error.
Our responsibility is to express an opinion on these standalone Ind AS financialstatements based on our audit. We have taken into account the provisions of the Act theaccounting and auditing standards and matters which are required to be included in theaudit report under the provisions of the Act and the Rules made thereunder. We conductedour audit of the standalone Ind AS financial statements in accordance with the Standardson Auditing issued by the Institute of Chartered Accountants of India as specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditor'sjudgment including the assessment of the risks of material misstatement of the standaloneInd AS financial statements whether due to fraud or error. In making those riskassessments the auditor considers internal financial control relevant to the Company'spreparation of the standalone Ind AS financial statements that give a true and fair viewin order to design audit procedures that are appropriate in the circumstances. An auditalso includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by the Company's Directors as well asevaluating the overall presentation of the standalone Ind AS financial statements. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our audit opinion on the standalone Ind AS financial statements.
In our opinion and to the best of our information and according to the explanationsgiven to us the standalone Ind AS financial statements give the information required bythe Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at 31 March 2017 its profit including other comprehensive income its cash flows andthe changes in equity for the year ended on that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Act we give in the Annexure 1'' a statement on the matters specified inparagraphs 3 and 4 of the Order.
2. As required by section 143 (3) of the Act we report that:
(A) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purpose of our audit; (B) In ouropinion proper books of account as required by law have been kept by the Company so faras it appears from our examination of those books; (C) The Balance Sheet Statement ofProfit and Loss including the Statement of Other Comprehensive Income the Cash FlowStatement and Statement of Changes in Equity dealt with by this Report are in agreementwith the books of account;
(D) In our opinion the aforesaid standalone Ind AS financial statements comply withthe Accounting Standards specified under section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014 and the Companies (Indian Accounting Standards) Rules2015 as amended;
(E) On the basis of written representations received from the directors as on 31 March2017 and taken on record by the Board of Directors none of the directors is disqualifiedas on 31 March 2017 from being appointed as a director in terms of section 164 (2) of theAct;
(F) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure 2" to this report;
(G) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone Ind AS financial statements Refer Note 36 to thestandalone Ind AS financial statements;
ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts Refer Note 21 to the standalone Ind AS financial statements;
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company; and iv. The Company hasprovided requisite disclosures in Note 13 to these standalone Ind AS financial statementsas to the holding of Specified Bank Notes on 8 November 2016 and 30 December 2016 as wellas dealings in Specified Bank Notes during the period from 8 November 2016 to 30 December2016. Based on our audit procedures and relying on the management representation regardingthe holding and nature of cash transactions including Specified Bank Notes we reportthat these disclosures are in accordance with the books of accounts maintained by theCompany and as produced to us by the Management.
Annexure 1 referred to in paragraph 1 under the heading "Report on Other Legal andRegulatory Requirements" of our report of even date.
Re: Mphasis Limited ("the Company")
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets. (b) All fixed assets have not beenphysically verified by the management during the year but there is a regular programme ofverification which in our opinion is reasonable having regard to the size of the Companyand the nature of its assets. No material discrepancies were noticed on such verification.
(c) According to the information and explanations given by the management there are noimmovable properties included in property plant and equipment/ fixed assets of thecompany and accordingly the requirements under paragraph 3(i)(c) of the Order are notapplicable to the Company.
(ii) The management has conducted physical verification of inventory at reasonableintervals during the year and no material discrepancies were noticed on such physicalverification.
(iii) According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms Limited LiabilityPartnerships or other parties covered in the register maintained under section 189 of theAct. Accordingly the provisions of clause 3(iii)(a) (b) and (c) of the Order are notapplicable to the Company and hence not commented upon.
(iv) In our opinion and according to the information and explanations given to usprovisions of section 185 and 186 of the Companies Act 2013 in respect of loans todirectors including entities in which they are interested and in respect of loans andadvances given investments made and guarantees and securities given have been compliedwith by the Company.
(v) The Company has not accepted any deposits from the public.
(vi) To the best of our knowledge and as explained the Central Government has notspecified the maintenance of cost records under section 148(1) of the Act for theproducts/ services of the Company. (vii) (a) The Company is generally regular indepositing with appropriate authorities undisputed statutory dues including providentfund employees' state insurance income-tax sales-tax service tax duty of customsduty of excise value added tax cess and other material statutory dues applicable to it.With regard to service tax dues we also draw reference to note 10 to the financialstatements.
(b) According to the information and explanations given to us no undisputed amountspayable in respect of provident fund employees' state insurance income-tax sales-taxservice tax duty of customs duty of excise value added tax cess and other materialstatutory dues were outstanding at the year end for a period of more than six monthsfrom the date they became payable.
(c) According to the records of the Company the dues outstanding of income-taxsales-tax service tax duty of customs duty of excise value added tax and cess onaccount of any dispute are as follows:
|Name of the Statute ||Nature of Dues ||Amount disputed (excluding penalty and interest) ||Amount paid/ refund adjusted under protest ||Bank guarantee provided under protest ||Period to which the amount relates (financial year) ||Forum where dispute is Pending |
|Income Tax Act 1961 ||Adjustment ||1712.65 ||107.47 ||- ||2012-13 ||CIT (Appeals) |
| ||for transfer ||343.12 ||224.79 ||- ||2011-12 ||CIT (Appeals) |
| ||pricing and ||563.35 ||563.35 ||- ||2010-11 ||CIT (Appeals) |
| ||other disallowances || || || || || |
| || ||1134.51 ||1033.48 ||- ||2009-10 ||ITAT |
| || ||5072.86 ||974.25 ||- ||2008-09 ||CIT (Appeals) |
| || ||268.74 ||268.74 ||- ||2007-08 ||ITAT |
| || ||774.09 ||526.40 ||- ||2006-07 ||ITAT |
| || ||324.56 ||113.76 ||- ||2004-05 ||ITAT |
| || ||4.64 ||- ||- ||2003-04 ||Karnataka High Court |
| ||Non-deduction of TDS ||491.02 ||20.00 ||455.19 ||2014-15 ||CIT(Appeals) |
| || ||1552.38 ||90.00 ||1365.62 ||2012-13 to ||CIT(Appeals) |
| || || || || ||2013-14 || |
| || ||3.37 ||- ||- ||1999-00 to ||Supreme Court |
| || || || || ||2001-02 || |
| || ||5363.73 ||366.96 ||4841.14 ||2005-06 to ||ITAT |
| || || || || ||2011-12 || |
| ||Disallowances under section 10A ||1.56 ||- ||- ||2008-09 ||CIT(Appeals) |
| || ||4.61 ||4.61 ||- ||2005-06 ||Supreme court |
| || ||85.20 ||- ||- ||2002-03 ||Supreme court |
| || ||121.43 ||10.00 ||- ||2001-02 ||Supreme court |
| || ||0.17 ||- ||- ||2000-01 ||Supreme court |
| || ||169.19 ||- ||- ||2003-04 ||Supreme court |
|Finance Act 1994 ||Service tax ||21.92 ||7.30 ||- ||2005-2007 ||CESTAT Karnataka |
| || ||143.67 ||10.78 ||- ||Dec-10 to Mar-11 ||CESTAT Karnataka |
| || ||20.80 ||2.06 ||- ||Oct-11 To Mar-15 ||Commissioner |
| || || || || || ||(Appeals)Karnataka |
| || ||2.04 ||- ||- ||2013-14 & ||Commissioner |
| || || || || ||2014-15 ||(Appeals)Karnataka |
| || ||109.41 ||6.67 ||- ||2005-06 to ||CESTAT Karnataka |
| || || || || ||2008-09 || |
| || ||2.60 ||0.19 ||- ||Oct-06 to Sep-11 ||CESTAT Karnataka |
(viii) In our opinion and according to the information and explanations given by themanagement the Company has not defaulted in repayment of loans or borrowing to financialinstitution bank government or dues to debenture holders.
(ix) According to the information and explanations given by the management the Companyhas not raised any money by way of initial public offer/ further public offer/ debtinstruments and term loans hence reporting under clause (ix) is not applicable to theCompany and hence not commented upon.
(x) Based upon the audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to the information and explanationsgiven by the management we report that no fraud by the company or no fraud on the companyby the officers and employees of the Company has been noticed or reported during the year.
(xi) According to the information and explanations given by the management themanagerial remuneration has been paid/ provided in accordance with the requisite approvalsmandated by the provisions of section 197 read with Schedule V to the Act.
(xii) In our opinion the Company is not a nidhi company. Therefore the provisions ofclause 3(xii) of the Order are not applicable to the Company and hence not commented upon.
(xiii) According to the information and explanations given by the managementtransactions with the related parties are in compliance with section 177 and 188 of Actwhere applicable and the details have been disclosed in the notes to the financialstatements as required by the applicable accounting standards.
(xiv) According to the information and explanations given to us and on an overallexamination of the balance sheet the company has not made any preferential allotment orprivate placement of shares or fully or partly convertible debentures during the yearunder review and hence reporting requirements under clause 3(xiv) are not applicable tothe company and not commented upon.
(xv) According to the information and explanations given by the management the Companyhas not entered into any non-cash transactions with directors or persons connected withhim as referred to in section 192 of the Act (xvi) According to the information andexplanations given to us the provisions of section 45-IA of the Reserve Bank of IndiaAct 1934 are not applicable to the Company.
Annexure 2 to the Independent Auditor's Report of even date on the standalone Ind ASfinancial statement of Mphasis Limited Report on the Internal Financial Controls underClause (i) of Sub-section 3 of Section 143 of the Companies Act 2013 ("theAct")
We have audited the internal financial controls over financial reporting of MphasisLimited ("the Company") as of 31 March 2017 in conjunction with our audit of thestandalone financial statements of the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's Management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to the Company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing as specified under section143(10) of the Companies Act 2013 to the extent applicable to an audit of internalfinancial controls and both issued by the Institute of Chartered Accountants of India.Those Standards and the Guidance Note require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the internal financial controls system overfinancial reporting.
Meaning of Internal Financial Controls Over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31 March 2017 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.
For S.R. Batliboi & Associates LLP
ICAI Firm Registration Number: 101049W/E300004
per Adarsh Ranka
Membership Number: 209567
Place : Bengaluru
Date : 25 May 2017